In 2019, Business Roundtable changed the definition of a corporation. Previously, the role of a company followed the understanding of 1976 Nobel prize winning economist Milton Friedman, who firmly believed that “business has one responsibility – to maximize the profits of its owners or shareholders” (Carroll & Buchholtz, 2012, “Classical Economics,” para. 1). Today, Business Roundtable, supported by about 200 c-level signators, redefines the purpose of a corporation to focus on all stakeholders (Business Roundtable, 2019), to better reflect how companies should operate in today's complex and intertwined world.
To see the full Statement on the Purpose of a Corporation, click on link.
As today's businesses are rewriting the script to move toward stakeholder capitalism, skeptics wonder how they will actually make the necessary radical shifts and avoid the pitfalls of good intentions gone bad. How will companies not only do the right thing to follow a triple bottom line, but also do it the right way where harm is minimized and meaningful positive impact is maximized. My research on Why and How U.S. Fortune 500 global corporations do CSR revealed sound strategies for corporations to pursue a stakeholder model of organizational development. The tactics, strategies and behaviors uncovered in my qualitative research are still relevant and significant today. Read the full article to learn more.
"For what shall an organization profit if it should gain the world but lose its soul."
- paraphrase Matthew 16.26, King James vers. (Bolman & Deal, 2004, p. 394)